Wednesday, February 11, 2015

How Russia Plans To Retaliate For The Saudi-Driven Collapse In Oil | Zero Hedge

A week ago we explained that yet another conspiracy theory, one involving virtually every geopolitical hotzone, from Saudi Arabia, to Russia, the United States, Qatar, Syria, ISIS, and Ukraine, has become fact when our speculation from last September, namely that the plunge in oil was an choreographed move between the US and the Saudis (even if Kerry realized - we hope - that it meant a recession for the US energy producing states and a collapse in the only vibrant US industry of the past decade: shale), one seeking to dislodge Russian control over the Syrian government and to facilitate the passage of a Qatar pipeline under Syrian territory.

This is what the NYT said: "Saudi Arabia has been trying to pressure President Vladimir V. Putin of Russia to abandon his support for President Bashar al-Assad of Syria, using its dominance of the global oil markets at a time when the Russian government is reeling from the effects of plummeting oil prices."

The NYT added:

Saudi Arabia and Russia have had numerous discussions over the past several months that have yet to produce a significant breakthrough, according to American and Saudi officials. It is unclear how explicitly Saudi officials have linked oil to the issue of Syria during the talks, but Saudi officials say — and they have told the United States — that they think they have some leverage over Mr. Putin because of their ability to reduce the supply of oil and possibly drive up prices.

That's the quo. As for the quid, it is as we predicted:

Any weakening of Russian support for Mr. Assad could be one of the first signs that the recent tumult in the oil market is having an impact on global statecraft. Saudi officials have said publicly that the price of oil reflects only global supply and demand, and they have insisted that Saudi Arabia will not let geopolitics drive its economic agenda. But they believe that there could be ancillary diplomatic benefits to the country’s current strategy of allowing oil prices to stay low — including a chance to negotiate an exit for Mr. Assad.

"Russia has been one of the Syrian president’s most steadfast supporters, selling military equipment to the government for years to bolster Mr. Assad’s forces in their battle against rebel groups, including the Islamic State, and supplying everything from spare parts and specialty fuels to sniper training and helicopter maintenance."

To be sure, the Chairman of the Russian State Duma International Committee Alexei Pushkov promptly rejected all the NYT allegations, writing on his Twitter account:

“There were no negotiations with the Saudis to decrease oil production
in exchange for Moscow’s refusal to support Assad. Hoax.”

... but that was to be expected - after all it is not as if the two powers are on friendly terms, plus the NYT leak was meant to push the fulcrum of leverage away from Russia. What is certain, however, is that Putin couldn't care less about his "friend" Assad, but he cares very much about Gazprom preserving its near-monopolistic dominance as marginal energy provider to Europe of last resort, one which gives Russia as much leverage over the bulk of Europe as the ECB's printing press, if not much more: Draghi's outside money only reaches about 1% of the population; Gazprom's heat reaches everyone.

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RT - News

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